fiscal update

New Brunswick is heading toward a $1.3‑billion deficit this year — the largest in its history.

The provincial government said rising costs in health care and social development are driving the shortfall.

The government’s third‑quarter fiscal and economic update projects a deficit of $1.328 billion to the end of March 2026, up $799.4 million from the originally budgeted shortfall of $549 million.

Senior officials said revenue is expected to be $372.1 million lower than forecast, driven by weaker corporate and personal income tax revenue and lower Harmonized Sales Tax returns.

Expenses are projected to exceed budget by $407.3 million, largely due to higher operating costs in the regional health authorities, Medicare services and out‑of‑province health‑care claims.

Social Development is also over budget because of increased demand in income assistance, child welfare, youth services and long‑term care.

Net debt is projected to reach $13.9 billion by year‑end.

Health and social costs drive most of the overspending

Health spending is now forecast to be $432.5 million over budget.

Officials said the increase reflects higher operating costs in the regional health authorities, rising Medicare expenses — including the physician services agreement signed earlier this fall — and more out‑of‑province health‑care claims.

Some of these costs were partially offset by lower spending in innovation and e‑Health programs.

Social Development is projected to be $127.1 million over budget.

The department is facing higher demand in income security programs, child welfare and youth services, and seniors’ long‑term care.

Officials said case loads and service needs have grown across multiple programs.

Other departments also reported pressures.

Natural Resources is $14.5 million over budget due to wildfire suppression and mobilization costs from last summer’s fire season.

Justice and Public Safety is $9.1 million over budget, largely from disaster financial assistance claims and WorkSafeNB costs.

Transportation and Infrastructure is $8.3 million over budget because of higher winter maintenance expenses.

Some areas came in under budget, including Education and Early Childhood Development, which is $38.2 million below forecast due to lower spending under the federal‑provincial child‑care agreement and the postponed rollout of the school lunch program.

Revenue declines tied to tax adjustments and economic factors

Corporate income tax revenue is projected to be $139.2 million lower than budgeted, reflecting a smaller provincial share of national corporate taxable income and a negative prior‑year adjustment.

Personal income tax revenue is expected to fall $107 million, also due to a prior‑year adjustment tied to 2024 tax filings.

HST revenue is projected to be $74 million lower, driven by prior‑year adjustments and the province’s rebate for purpose‑built rental housing.

Forestry royalties are expected to fall $45 million because of weaker market conditions and lower royalty rates designed to maintain full utilization of Crown and private land resources.

Some revenue categories increased.

Gasoline and motive fuel taxes are up $11 million, licences and permits are up $10.5 million, and sinking fund earnings are up $10 million due to higher interest rates.

Finance Minister René Legacy said the province is facing a dramatically different financial landscape than last year.

“We are in a very different fiscal environment than when we were a year ago,” Legacy said.

“Costs are rising, and the uncertainty with trade and tariffs is having an impact on how we must plan for the future.”

Legacy said the government must work to control spending and find new ways to increase revenue as it prepares the next budget.

He also noted New Brunswick continues to have one of the lowest debt‑to‑GDP ratios in Canada east of Saskatchewan.

Residents can provide feedback on the upcoming budget through the province’s online consultation until Friday.

Opposition says government is overlooking revenue opportunities

Official Opposition finance critic Don Monahan said the fiscal update marks “a very troubling day for New Brunswickers and taxpayers of the province.”

He said the projected deficit could climb even higher.

“We’re fearful that it may rise between 1.5 and 2 billion — the largest deficit that this province has ever seen,” Monahan said.

He said the province should be developing its own natural gas resources to help reduce the deficit.

“We have $186 billion worth of natural gas in this province that we actually have tapped and are shipping some product down to the U.S. right now,” he said.

“But we’re going to turn a blind eye, and we’re going to focus on taking Alberta’s natural resources and the transfer payments.”

Monahan also pointed to the long‑delayed Sisson mine project north of Fredericton.

“We need more than one Sisson mine per year just to cover the deficit of this Holt Liberal government,” he said.

“They promised voters in 2024… a full mandate of balanced budgets.”

He said rising debt could crowd out spending on health care, education and social programs.

“This province is spending money that we do not have with no real results, and that is very troubling,” he said.